Audit and Assurance Practice Questions
Course Introduction
Audit and Assurance is a course designed to provide students with a comprehensive understanding of the principles and practices of auditing, emphasizing the role of assurance in the financial reporting process. The course covers fundamental concepts such as audit planning, risk assessment, internal controls, evidence gathering, and reporting. It also explores the ethical and legal responsibilities of auditors, the regulatory environment, and the importance of professional skepticism. Through case studies and practical applications, students learn how audits provide credibility to financial statements and safeguard stakeholder interests, preparing them for careers in public accounting, corporate governance, and risk management.
Recommended Textbook
Auditing and Assurance Services 6th Edition by Grant Gay
Available Study Resources on Quizplus
14 Chapters
681 Verified Questions
681 Flashcards
Source URL: https://quizplus.com/study-set/2630 Page 2
Chapter 1: Assurance and Auditing: An Overview
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52502
Sample Questions
Q1) Which of the following is not one of the fundamental principles underlying the objective of an audit?
A)Knowledge.
B)Communication.
C)Evidence.
D)Client satisfaction.
Answer: D
Q2) Independent auditors perform audits on the financial reports of public companies.This type of auditing can best be described as:
A)a discipline that assures financial information presented by management.
B)an activity whose purpose is to search for irregularities.
C)a regulatory function that prevents the issuance of improper financial information.
D)a professional activity that measures and communicates financial and business data.
Answer: A
To view all questions and flashcards with answers, click on the resource link above. Page 3
Chapter 2: Audit Regulation, Structure of the Profession and
Auditors Liability
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52501
Sample Questions
Q1) Membership of the International Auditing and Assurance Standards Board (IAASB) consists of:
A)international audit firms.
B)International Federation of Accountants (IFAC) member bodies.
C)non-auditor representatives.
D)All of the given answers are correct.
Answer: D
Q2) Big Ltd wished to acquire the ordinary shares of Small Pty Ltd and engaged Albert & Associates to audit the financial report of Small Pty Ltd.Albert & Associates failed to discover a significant liability when performing the audit.In a common law action against Albert & Associates, Big Ltd, at a minimum, must prove:
A)negligence on the part of Albert & Associates.
B)fraud on the part of Albert & Associates.
C)that Albert & Associates knew that the liability existed.
D)All of the given answers are correct.
Answer: A
To view all questions and flashcards with answers, click on the resource link above.
4
Chapter 3: Ethics, Independence and Corporate Governance
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52500
Sample Questions
Q1) Which of the following is not an ethical attribute of an external auditor?
A)Independence.
B)Client advocacy.
C)Objectivity.
D)Concern for the public interest.
Answer: B
Q2) An auditor strives to achieve independence in appearance to:
A)maintain public confidence in the auditor.
B)maintain an unbiased mental attitude.
C)comply with the Corporations Act 2001.
D)become independent in fact.
Answer: A
Q3) An auditor is independent if they are:
A)intelligent.
B)independent in fact and in appearance.
C)independent in fact and honest.
D)logical and consistent.
Answer: B
To view all questions and flashcards with answers, click on the resource link above. Page 5
Chapter 4: Overview of Elements of the Financial Report
Audit Process
Available Study Resources on Quizplus for this Chatper
71 Verified Questions
71 Flashcards
Source URL: https://quizplus.com/quiz/52499
Sample Questions
Q1) The risk that, due to the application of an inappropriate audit procedure, an auditor will conclude that a material error does not exist in an account balance when, in fact, such error does exist is referred to as:
A)sampling risk.
B)control risk.
C)non-sampling risk.
D)inherent risk.
Q2) Which of the following best describes the concept of audit risk?
A)The risk of the auditor being sued because of association with an audit client.
B)The risk that the auditor will provide an unmodified opinion on a materially misstated financial report.
C)The overall risk that a material misstatement exists in the financial report.
D)The risk that auditors use audit procedures that are inappropriate.
Q3) Auditors are most likely to use focused audit procedures to examine:
A)routine transactions.
B)low-risk assertions.
C)only the rights and obligations assertion.
D)high-risk assertions.
To view all questions and flashcards with answers, click on the resource link above. Page 6
Chapter 5: Planning, Understanding the Entity and Assessing Business Risk
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52498
Sample Questions
Q1) An abnormal fluctuation in gross profit that might suggest the need for extended audit procedures for sales and inventories would most likely be identified in the planning phase of the audit by the use of:
A)tests of transactions and balances.
B)a preliminary review of internal accounting control.
C)specialised audit programs.
D)analytical procedures.
Q2) Which of the following procedures would not be used to obtain an understanding of the entity and its environment?
A)Observe entity operations.
B)Re-perform entity processes.
C)Verify proper evaluation of inventory subject to technological obsolescence.
D)Review prior year's audit documentation.
Q3) Audit planning assists the auditor to:
A)identify and resolve potential problems on a timely basis.
B)devote appropriate attention to important areas of the audit.
C)perform the audit effectively and efficiently.
D)All of the given answers are correct.
To view all questions and flashcards with answers, click on the resource link above. Page 7
Chapter 6: Assessing Inherent Risk, and Other Specific
Business Risks
Available Study Resources on Quizplus for this Chatper
35 Verified Questions
35 Flashcards
Source URL: https://quizplus.com/quiz/52497
Sample Questions
Q1) If, as a result of auditing procedures, an auditor believes that a client may have committed illegal acts, which of the following actions should be taken immediately by the auditor?
A)Consult with the client's legal counsel and with the auditor's legal counsel to determine how the suspected illegal acts will be communicated to the shareholders.
B)Extend normal auditing procedures to ascertain whether the suspected illegal acts may have a material effect on the financial report.
C)Inquire of the client's management and consult with the client's legal counsel and/or other specialists, as necessary, to obtain an understanding of the nature of the acts and their possible effects on the financial report.
D)Notify the audit committee about the nature of the acts and request that they give guidance with respect to the approach to be taken by the auditor.
Q2) The auditor's report covers the solvency statement in the:
A)directors' declaration.
B)chairperson's review.
C)directors' report.
D)None of the given answers are correct.
To view all questions and flashcards with answers, click on the resource link above.
Page 8
Chapter 7: Understanding and Assessing Internal Control
Available Study Resources on Quizplus for this Chatper
70 Verified Questions
70 Flashcards
Source URL: https://quizplus.com/quiz/52496
Sample Questions
Q1) Which of the following statements is one of the overriding principles of internal control?
A)Responsibility for accounting and financial duties should be assigned to one responsible officer.
B)Responsibility for the performance of each duty must be fixed.
C)Responsibility for the accounting duties must be borne by the audit committee of the company.
D)All of the options listed here are correct
Q2) The auditor obtains evidence supporting the notion that proper segregation of duties exists by:
A)personally observing the employees who apply the control procedures.
B)reviewing job descriptions in the personnel department.
C)preparing a flowchart of duties performed by personnel.
D)performing tests to determine whether control procedures operated consistently throughout the period.
To view all questions and flashcards with answers, click on the resource link above.
9
Chapter 8: Tests of Controls
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/52495
Sample Questions
Q1) Which of the following tests of control most likely would help assure an auditor that goods shipped are properly billed? Checking that the client has:
A)scanned the sales journal for sequential and unusual entries.
B)examined shipping documents for matching sales invoices.
C)compared the accounts receivable ledger to daily sales summaries.
D)inspected unused sales invoices for consecutive pre-numbering.
Q2) In auditing the purchases system, an auditor vouches a sample of entries in the voucher register (accounting records) to the supporting documents.Which assertion would this test of controls most likely support?
A)Completeness.
B)Occurrence.
C)Accuracy.
D)Classification
Q3) The cut-off assertion for accounts payable involves testing whether all accounts payable are:
A)recorded at their correct amount.
B)actually liabilities.
C)recorded in the proper period.
D)properly classified in the financial report.
To view all questions and flashcards with answers, click on the resource link above.
Page 10
Chapter 9: Substantive Tests of Transactions and Balances
Available Study Resources on Quizplus for this Chatper
80 Verified Questions
80 Flashcards
Source URL: https://quizplus.com/quiz/52494
Sample Questions
Q1) Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's assertion of valuation and allocation of inventory?
A)Testing the entity's computation of standard overhead rates.
B)Obtaining confirmation of inventories pledged under loan agreements.
C)Reviewing shipping and receiving cut-off procedures for inventories.
D)Tracing test counts to the entity's inventory listing.
Q2) Hoang is engaged in the audit of a power company that supplies power to a residential community.All accounts receivable balances are small and the internal control structure is effective.Customers are billed twice monthly.In order to obtain evidence with regards the valuation and allocation assertion of the accounts receivable balances as at balance date, Hoang would most likely:
A)send positive confirmation requests.
B)examine evidence of subsequent cash receipts.
C)use statistical sampling instead of sending confirmation requests.
D)send negative confirmation requests.
To view all questions and flashcards with answers, click on the resource link above.
11
Chapter 11: Completion and Review
Available Study Resources on Quizplus for this Chatper
30 Verified Questions
30 Flashcards
Source URL: https://quizplus.com/quiz/52493
Sample Questions
Q1) After an auditor has issued an auditor's report on the financial report of an entity, the auditor should:
A)undertake further audit tests only if new information comes to the auditor's attention concerning an event that occurred prior to the date of the auditor's report that may have affected the auditor's report.
B)review the accounting records for unusual transactions up to the date of the annual general meeting.
C)continue to carry out analytical procedures.
D)None of the given answers are correct.
Q2) A major customer of an audit client suffers a fire just after year-end and the audit client believes that this event could have a significant direct effect on the financial report.The auditor should:
A)advise management to disclose the event in notes to the financial report.
B)disclose the event in the auditor's report.
C)withhold submission of the auditor's report until the extent of the direct effect on the financial report is known.
D)advise management to adjust the financial report.
To view all questions and flashcards with answers, click on the resource link above.
Page 12
Chapter 12: The Auditors Reporting Obligations
Available Study Resources on Quizplus for this Chatper
60 Verified Questions
60 Flashcards
Source URL: https://quizplus.com/quiz/52492
Sample Questions
Q1) Prince, an auditor, was engaged to audit the financial report of Randwick Company after its financial year had ended.Prince neither observed the inventory count nor confirmed the receivables by direct communication with debtors but was satisfied concerning both after applying alternative procedures.'Prince's auditor's report most likely contained a(n):
A)unmodified opinion with an explanatory paragraph.
B)unmodified opinion.
C)disclaimer of opinion.
D)qualified opinion.
Q2) On 2 July 20X0 Fluro Paint Ltd received a notice from its primary suppliers that all wholesale prices would be increased by 10 per cent, to be effective immediately.On the basis of the notice Fluro Paint Ltd revalued its 30 June 20X0 inventory to reflect the higher costs.The details of the adjustment were disclosed in the notes to the financial report.The inventory adjustment was material.The auditor of the 30 June 20X0 financial report would issue:
A)an unmodified opinion with an Emphasis of Matter of disclosure.
B)a disclaimer of opinion.
C)a qualified opinion.
D)an unmodified opinion.
To view all questions and flashcards with answers, click on the resource link above.
Page 13
Chapter 13: Other Assurance Services and Advanced Topics
Available Study Resources on Quizplus for this Chatper
45 Verified Questions
45 Flashcards
Source URL: https://quizplus.com/quiz/52491
Sample Questions
Q1) Which of the following must accompany an unaudited financial report which is prepared by an auditor?
A)Either a disclaimer of opinion or adverse opinion.
B)Only a disclaimer of opinion.
C)Either a disclaimer of opinion or a qualified opinion.
D)None of the given answers.
Q2) In which of the following scenarios is it more likely that the information provided will be continuously assured?
A)An entity decides to assure its environmental and sustainability report.
B)An entity has to provide a compliance report with regards to whether there has been a breach of the rules with regards to how confidential credit card details for electronic commerce transactions are stored.
C)An identity identifies that there is a risk that financial investments are not being written down to market value in the financial statements, as is required by accounting standards.
D)Financial information where a client determines to assure the quarterly financial reports as well as the half-yearly financial reports.
To view all questions and flashcards with answers, click on the resource link above.
Page 14
Chapter 14: Internal Auditing
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/52490
Sample Questions
Q1) Elizabeth Cheng, CIA, works for a large department store.She is performing an audit of her company's cash function.Which of the following is an action in which due professional care is lacking?
A)Cheng flowcharts the work of the cash function but tests only a sample of the transactions.
B)Cheng is extremely pleased with the internal controls and the operation of the cash function and in her report states that she is sure no irregularities are currently present.
C)Cheng reviews company records to ascertain that all employees who handle cash receipts and disbursements are covered by workers compensation.
D)Cheng knows that the work of the cash function can be done effectively with one less employee.She includes this finding in her report even though she knows it will adversely affect employee morale in the cash function.
Q2) Which of the following is not a main goal of internal auditing?
A)Add value to an organisation's operations.
B)Help an organisation accomplish its objectives.
C)Provide reliable information to external users.
D)Improve the effectiveness of risk management of an organisation.
To view all questions and flashcards with answers, click on the resource link above.
Page 15
Chapter 15: Audit and Assurance Services in the Public Sector
Available Study Resources on Quizplus for this Chatper
25 Verified Questions
25 Flashcards
Source URL: https://quizplus.com/quiz/52489
Sample Questions
Q1) What is the main concern of performance auditing?
A)Compliance with relevant laws and regulations.
B)Probity.
C)Financial report attest auditing.
D)Efficiency, economy and effectiveness.
Q2) Which of the following statements concerning auditing in the public sector is correct?
A)The Auditor-General only conducts financial report audits in the public sector.
B)Private sector auditors may conduct audits in the public sector as delegates of the Auditor-General.
C)The Auditor-General is appointed by the government.
D)None of the options listed here are correct.
Q3) Why is it important to establish performance audit criteria?
A)They are a basis for communication with management.
B)They indicate the scope of the performance audit.
C)They are a basis for developing audit programs and questionnaires.
D)All of the given answers are correct.
To view all questions and flashcards with answers, click on the resource link above.
Page 16